Court Rejects Interns Overtime Pay Settlement

Court Rejects Interns Overtime Pay Settlement

NEW YORK — A federal court in New York ruled against the approval of a proposed settlement agreement of a class wage claim under the Fair Labor Standards Act (FLSA). The claim was brought by former unpaid interns for The Madison Square Garden Co. against the company for failing to pay minimum wage and overtime. The class includes approximately 1,000 interns who worked for Madison Square Garden from September 2007 through the date that the court approves the settlement.

Unpaid Internship Should Have Been Paid

According to plaintiffs in this case, the company improperly classified them as interns in order to deny them wages. The lead plaintiff filed the suit because he was working as an intern or student associate without pay even though he was performing tasks that were critical to the company’s operations. According to the suit, he typically worked five days a week on a variety of tasks such as data entry, tracking inventory, opening packages and organizing items contained in the packages, all of which were central to Madison Square Garden’s functions.

Under FLSA, non-exempt individuals must be compensated for the services they perform for an employer. Internships be viewed as employment, all of the following factors are met:

  • The internship is similar to training that would be given in an educational environment;
  • The internship experience is for the benefit of the intern;
  • The intern does not displace regular employees;
  • The employer that provides the training derives no immediate advantage from the activities of the intern;
  • The intern is not necessarily entitled to a job at the end of the internship; and
  • The employer and the intern understand that the intern is not entitled to wages.

Approval of Settlement Agreement

The company had agreed to pay $795,000 to settle the plaintiff’s claims. However, the federal court refused to approve the settlement because the plaintiffs had not sufficiently shown an illegal common policy. The members of class apparently worked in about 100 different departments and had different employment experiences. Additionally, the court stated that plaintiffs had only offered conclusory and unsupported statements that the deal would be reasonable. Parties cannot enter into private settlements of FLSA claims without the approval of either a federal district court or the U.S. Department of Labor.

Regardless of how an employer characterizes the relationship with its workers, it cannot skirt the requirements of FLSA if an employment relationship actually exists. If you or someone you know is being denied minimum wage and overtime and is a non-exempt employee, you should call (855) 754-2795 or complete the Free Unpaid Overtime Case Review form on the top right of this page. Our top-rated team of wage lawyers will evaluate your situation to determine your best course of action. We will also determine if it is in your best interest to file a lawsuit against your employer. There are strict time limitations for filing, so it is important that you call our experienced attorneys today.

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